Not a stretch where I would come out on this, but it never ceases to amaze and amuse me how liltle understanding of the content business, or the business world in general that many in the blogosphere have.
Let me provide a simple scenario for you.
HBO. HBO charges a monthly fee to subscribers. If someone can watch an HBO show on Google Video or Youtube, even if its divided into 1,3 or 6 parts and re assembled into a playlist, they have far less incentive to subscribe or retain their subscription(s).
HBO in turn, syndicates those shows to cable networks. As an example, A&E paid a reported $2.2 million dollars PER EPISODE of the Sopranos. If the content is available online, do you think maybe it might reduce the value to A&E and HBO of the Sopranos ? And thats before we even get to overseas syndication. Youtube and Google VIdeo have a great deal of popularity overseas because in many cases US shows are not as readily available. Online international viewing reduces the international revenue opportunity.
THen of course there are DVD sales. Youtube downloads every video right to your PC. Google Video not only downloads to your PC, it provides the option to convert it into a PDA format including the Ipod.
So tell me why it makes good business sense for HBO to let users post the content they sell for a ton of money ?
Now some of those who are so self absorbed in net culture and have no idea how the real world works might think that all of this leads to more viewing and consumption. Maybe it does. Maybe for some shows, like those on broadcast TV, it really does help to have as much promotional video for the show, even to the point of full episodes available both on Youtube and Google Video. There are definitely situations where it could help a show gain viewers and increased sales of DVDs. All of which has nothing to do with whether Viacom or any content provider should let users upload video.
I have a secret for you. ITS EASY FOR END USERS TO UPLOAD video to Youtube and Google VIdeo. ITS EASIER FOR THE CONTENT OWNER to do the same thing.
VIacom doesnt need John or Sally to upload video for them. They are more than capable of doing it themselves. If Viacom wants to put up snippets, scenes, mashups, mockups, quarter, half or full episodes of anything they own, there is nothing to stop them. Its their choice. If they are smart, they will fill every Gootube Server they can reach with their content in a manner that drives viewers back to Viacom properties. They will experiment with every option, including those that engage and involve their viewers, to see what works and what doesn't work and what makes them the most money. Why not ? Google is paying for all the bandwidth. And by the way, if the content owner uploads a ton of content and DOESNT do a deal first with Gootube, Gootube cant sell a nickels worth of advertising on the play pages.
And while they are experimenting , they should continue to sue the hell out of Google. Google blew it. They had no confidence in user generated content generating enough traffic to drive Youtube so they closed their eyes to the obvious. There is absolutely no value to a media company in letting users actually upload video. If they want to know what users want, they can create their own version of twitter that lets people tell them "what they want to watch right now" and respond to it.
My hope is that this lawsuit is not a negotiating ploy. I dont think it is. Why ? Because there is no downside to Viacom to run this one out to the end. If they win the suit, they make their Billion Dollars, which given this lawsuit could take years, could grow to 10s of Billions in damages if Gootube doesn't take any action to stop the ongoing infringing uploaders. If Viacom loses, they lose legal fees of course, but Google still has to negotiate to get their content. The only real hassle is that Viacom must continue to send takedown notices. Thats such an easy choice, 10mm in legal fees vs the potential for BILLIONS and BILLIONS of dollars. Its so easy, that I expect many suits to follow this one.
So who wins ? On the legal side, I wont pretend to be an IP lawyer, but I will invoke my blogger's right to speculate on some of the Safe Harbor Issues, so here goes.
On the issue of Red Flag Knowledge of Infringing content, thats an easy win for Viacom..."Mr Schmidt, have you used Youtube ? What have you looked up in your searches ? Google captures this information doesnt it ? Could you turn over your searches for the last 12 months...Oops. Who knew you loved Beavis and Butthead and won't miss the interviews on 106 and Park." Lucky for Eric, mini piratebays run amok on Gootube. People take ownership of shows and even genres and upload the same show(s) over and over , switching IDs when the previous ID is cancelled. They are there working just like piratebay and bit torrent trackers, switching IDs rather than having to change servers or URLs. Bottom line is that Gootube is a haven for pirates operating under Gootubes cloak of respectability. The sad part is Google Video in particular makes it easy for people who could never figure out bittorrent or even know what it is in the first place to download videos. Here is where eps of Entourage of easily available.
I cant imagine the powers that be at Google and Youtube havent used their own product and its features with infringing content.
Then there is the issue of what business are you in and removing repeat infringers. In previous cases, there was always a financial link between the "Service Provider/Host" and the uploader. Ebay knows their customers. Loopnet knows their customers. I happen to believe that its key that the "Service Provider" have a real business and infringing action by its users is as much a problem to the Provider as it is to the copyright owner. An ISP makes money with the monthly bill. Ebay makes money from transactions. A real estate hosting company makes money from listings. They all know exactly who their customers are and if one of them uploads infringing materials, they can actually identify the person and if they do it repetitively remove them. In either case, it doesn't change or impact their core business and it helps identify those who dont respect copyright and gives the content owner the option of taking action.
Gootube has no earthly idea who their users are. They make no effort to find out. So if someone wants to repetitively upload movies, shows, whatever, they just jump from user id to user id.
Finally, this last point goes to the heart of how poorly Gootube relates to copyright law in general. THe DMCA Safe Harbors as they are written will not exist for very long. You can bet the same companies that spend tens of millions of dollars to extend copyrights to ridiculous extremes, or that want to push for truly ridiculous things like a Broadcast Flag, or the new Webcast Royalties, will spend whatever it takes to get the law changed to their liking. Just as they have done multiple times before. One thing is certain, our lawmakers and lobbyists are relatively cheap compared to the dollars at stake here.
Google may not know it, but they have already lost. They will lose this case if its fought to the end, and whatever moral victories they may be able to gain in a legal battle or settlement will be ripped from them when the DMCA is changed. Then they will still have to negotiate with copyright owners to get their content. THe entertainment industry may not be great at many things, but getting copyright law changed to meet their expecations is one thing they are better than any one at.
You Go Viacom !
Reader Comments
(Page 2)22. Your scenario is flawed. You speak to subscription revenue lost when viewing online. The issue is that subscription revenue models are dying. As cameras, movie-making, and distribution technologies become less expensive, user-generated content will be king. I have HBO, Showtime and Cinemax at home that I pay for, but I rarely watch any of them. I do, however, watch Ze Frank daily.
You can always tell when a revenue model is dying. That's when the attorneys come out and try to squeeze the last dying dollar out of it.
23. Am I the only one that doesn't use YouTube? With the exception of seeing Sadaam hanged, I've never watched a video on YouTube, and I can't see me needing to any time in the future. If there is a show I want to watch I'll buy it from Itunes, or if there's a game I want to be able to watch over and over (Kobe's 81 comes to mind), I'll buy it from Google Video. I have no interest in watching poor quality, pirated shows that have been cut in to multiple parts. My feeling is that most people feel this way, and only go to YouTube for stuff they can't find elsewhere. I just fail to see this as being a big issue for the average consumer.
Posted at 9:06AM on Mar 14th 2007 by Joe
24. There's three things wrong with your HBO argument:
1. People are doing it anyway
2. HBO isn't going to stop people from doing it anyway
3. Oh yeah, and people are doing it anyway.
So here's HBO's choice:
1. Give consumers what they want.
2. Stand by and do nothing while consumers take/build what they want on their own.
Neither one of those options involves continued lucrative deals with A&E. Good thing or bad thing, that's just reality. Youtube is the world we live in now.
You'd think that they'd learn from what happened with Napster. Did destroying it stop piracy? Hell no, it made it worse.
If they destroy Youtube is that going to make the threat that Youtube represents go away? Not a chance. Right now, YouTube is their best friend because it's effectively stealing traffic from higher quality, HD torrents. Kill Youtube and you might just find a lot more people downloading those full episodes rather than enjoying the clips at a place that they can at least have *some* control over.
25. They're doing this with your content, why don't you file? My guess is because you're better at complaining than actually playing - just like in the NBA. You make a big fuss about a hot issue that somehow affects you financially and use it to draw more attention to your products... you make it very hard to give a sh*t about your blog or views, when its clear all you really care about is how this affects Cuban.
Posted at 9:52AM on Mar 14th 2007 by JDA
26. JDA,
Aren't most blogs self serving? That's the point. Get out your opinion on things that matter to You. You have the choice of not reading it, but don't criticize a person for having an opinion. Just state your disagreement with it.
Posted at 10:09AM on Mar 14th 2007 by Joe
27. oh please... there is a reason why you did not sue YouTube. because you know deep down (or your legal team knows) their really isn't a case here, no matter how much you hate YouTube. (they are not directly profiting from those clips. period.) This is why you post ur view, to get a feel for the situation at the user level... to alieve your lawyers uncertainty.
Viacom is now a freaken laughing stock. like a 3yr old who wants ice cream instead of dinner... all they know how to do is cry to get their way.
any action viacom claims is laughable. i wrote why here http://internet.seekingalpha.com/article/29526
28. I know they have a legal case, but I still think they lose.
Youtube is really successful with clips. You've discussed how unreliable the internet is at streaming, and that's 100% correct. I'm sure a few eccentrics are logging into Youtube to watch paid TV, but that's hardly a billion dollar business.
As far as killing Youtube, et al, I don't see it happening. You want to paint them as napster, but Youtube actually provides a unique service. You say the networks can provide this, but they can't. You need a fanbase doing clips for them to get traction. Just compare what's on Youtube for the NBA compared to NBA commercials. I know NBA.com now has clips of top 10 dunks, etc. and that's great and that's smart, but you can't bring non-fans in by hosting on NBA.com.
They should just tell Google to make any clip longer than 10 minutes go through a certification process to check for originality. Force them into the clips and original content business. I think you're right, it's a nudge-nudge, wink-wink situation with full shows.
But Youtube doesn't threaten Viacom's/your business to the degree that cracked HD content does. You need to create a streaming HD business where the content is never physically available for hackers to exploit. Where the content isn't burned overseas and then pirated like mad.
The same folks using YOutube for whole episodes are crazy enough and motivated enough to swap files online somewhere else. It's time to let SD content go - at least in clip form - and focus on HD.
Posted at 10:28AM on Mar 14th 2007 by solomonrex
29. the ultimate video outlet is coming: The Hollywood Project
Keep your eyes open!
Posted at 10:28AM on Mar 14th 2007 by jedi master
30. #4
"If I burn mix music CDs (copyrighted material), and send it to my friends via USPS, would it be fair to sue USPS, since obviously they are delivering the CDs? What's the difference?"
If UPS knew and benefited from shipping this content, then "Hell yeah"!
32. You go Bell !!! You go Salon!!! LOL LOL LOL.. poor mark.. again he is behind the curve. The law is on Googles side. Cases like this take years to mature... they will negotiate if they are smart. http://slate.com/id/2152264
33. Want to pick up on 2 points. First, if I pay for HBO already, I expect in the near future to be able to access HBO content from multiple devices for no additional costs. Key here is the issue of security for HBO which is one of the key things that Eric Schmidt has been promising for a long time and hasn't delivered, hence Viacom's lawsuit. Second, Google is trying to be the ad broker for the world across all media. Look out for YouTube becoming an in stream, ad supported, behaviorally targeted property with generous ad revenue sharing with the originator of the content. Look for this to be equally applicable to individuals (who generate the content, not just upload someone else's) and to corporates. Will the Viacom's of the world be happy with that? I believe they will. This is about Google getting their act together on the ad supported model and then selling it to the corporates. Whilst I appreciate that you hope this isn't a negotiation, I believe it is and I think that we're not going to see the clock rolling back. Behavior has now officially changed amongst the user base and the next thing will be the revenue models that emerge around it to stop the bleating from the content generators.
Posted at 10:57AM on Mar 14th 2007 by Simon
34. the entourage example that cuban posted is great. why would I need to pay my $10 a month for HBO when i can watch their shows for free online? What if other subscribers start to do the same thing? HBO starts to lose money, the value of their shows go down, etc, then they will sue google.
Just because everybody is doing it is not a good reason not to sue. If google is profiting from it and youtube profited it from it by getting paid 1.6 billion on content they did not own, I want a piece of that pie. If chad hurley and steven chen got rich because of my content and did not pay me anything, I would be pissed.
Posted at 11:04AM on Mar 14th 2007 by ashwin
35. If GoogTube, er.., YouGoog shows for free what I'm paying DISH to see, then who is getting ripped off? Me, as well as the copyright owner. As to the crappy viewing quality of GooGoob video in flash, and whether it threatens or diminishes the value of the high-quality original, that's like the crappy quality t-shirts sold in alleys near rock concerts. By buying crappy copies, you get ripped off, as does the person selling the authorized versions.
YouTube exists because it replays the copyrighted content of others. Check the play counters for most user-generated videos, and it is dwarfed by the numbers of times that high-quality video is replayed. Dealing in unauthorized video content is a cornerstone of YouGOOg's business model. The law, and fairness, cuts against that model.
36. I agree that content owners should take advantage of the free demographic info offered by the youtubes and put their content out through them.
However, the tough part is now anyone can do a youtube and share their video content. There are hundreds of sites like it now.
The content owners need to step back and look at the value of the information available to them from these sites, because sharing won't stop.
Posted at 11:33AM on Mar 14th 2007 by Tim Taylor
37. Copyright protected content is Viacom’s (and like media organizations) business! Any goofy argument against these companies about the "rich getting richer" is BS! (Quit the Peace Corps and start our own business, then see how you feel). Google got cocky and forgot that the ball is in the content provider's court. Granted, in some instances, a partnership with Youtube may beneficial for content providers. But Youtube relies on their content, not the other way around. When Google first bought Youtube it was the talk of the town. The media companies said "Wow, we need to get in on this." The hype has subsided and companies like Viacom said "Wait a second, we create and distribute the content Google is essentially making money off of; they should be coming to US with offers!" These companies will get together and crush Youtube if Google continues to play coy. NEWS FLASH: If college kids don't have to pay for content they like and consume, they won't. So it's hard to argue that these user uploaded videos bring MORE revenue to content providers. I think Mark's idea about beating Youtube at its own game with promotional spots is good, but it will really just help in the dilution and ultimate demise of Youtube.
Posted at 11:37AM on Mar 14th 2007 by Andy P
38. It comes down to how the courts interpet copywrite law i think.
Let me ask you this mark.
Do you think that Domains of trademarks or companies names shouldnt be sold to people other than the holder of the trademark or company? - email me. id like to hear your response.
Posted at 11:50AM on Mar 14th 2007 by Mike Verinder
39. The silliest part about the rationalization of this issue is the justification of action based upon desire. I want a Ferrari for free, but if I call a dealer or Modena they aren't going to just give one to me. If I see one on the street and just "borrow" it for a jaunt around the block, I'll still end up in the slammer. The drive may make me want one even more, but its still stealing.
What someone wants is irrelevant when it comes to the rules. One could argue that its why rules were created in the first place, to correct for improper and misplaced human desires that supplanted the rights of others.
Some might say that the Ferrari is tangible, but content isn't. Both have resources that go into creating them, and the builders/creators do so with the expectation that there will be some return for their efforts. Tangible or not, its still a product.
As an aside, My buddies and I had a pool going on when Mark would post on this. No one picked anything later than today (3/14)...
Posted at 12:19PM on Mar 14th 2007 by Steven Hammer
40. Youtube will be shaved, sterilized, and destroyed. Mark saw this coming a long time ago. Actually, we all did, it was called Metallica vs Napster.
Posted at 12:30PM on Mar 14th 2007 by Tristan Yates
21. I have adopted the policy that people who advocate piracy for any reason, or defend those that enable piracy, aren't important enough to listen to their arguments. "In one ear and out the other," so to speak, they can take their place with the communists and PETA.
You have brought up one of the best counter-arguments to the common "but it builds popularity in the brand" piracy-argument. "If they want to, they'll do it themselves." That's great.
I also like "TANSTAAFL". Piracy accounts for billions of dollars of wasted bandwidth, at a time when we're talking about spam email bogging down the Internet. Electricity requirements to run all of this are through-the-roof, in a time when rolling black-outs plague California and Al Gore is winning Nobel Peace Prizes for a scare-piece documentary. Don't forget to pay your server farm staff, and keep everything updated and repaired. Piracy isn't "free digital copying," it uses real resources, with the true cost hidden by the buy-in-bulk paradigm of those resources. Rough estimates come up to about $1USD/GB for current costs of hosting and transfering data across the Internet IF you can guarantee 100% uptime and 100% bandwidth utilization. Indeed, the price is so high, that any downtime you have, you can watch the seconds tick by in cents.
Posted at 8:29AM on Mar 14th 2007 by Sean McBeth